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Gifting income to my retired parent

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KJS

70 Points Posted on 16 December 2020

A friend would like to have the following answered:

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I wish to gift shares to my parent (retired with no pension) to avail the dividend as income. I have a few questions related to it.

1. Will a Gift Deed need to be made? Will it need to be registered?

2. Will my parent be taxed?

3. Can my parent gift OR will back the shares to me at a later date? Can a HUF be helpful in this matter?

Thanks

Replies (2)

Quick Summary

This discussion explores gifting shares to a retired parent to provide them with dividend income. Key questions cover the necessity and registration of a gift deed, potential tax liabilities for the parent, and whether the shares can be gifted or willed back later. Advice suggests a gift deed is advisable for record-keeping, though not strictly mandatory for movable property like shares. The parent may not be taxed directly on receiving shares, but will need to file returns, with taxation depending on their overall income, particularly dividends exceeding the basic exemption limit.

ayusmita

Tax consultant

3466 Points Posted on 17 December 2020

1 .yes gift deed needed as share is transferred

2. No your parents will not be taxed but returns will be filled

And taxation will be depends on the income .

3. If they want can return you and sorry I don't understand your last query completely.

H

50 Points Posted on 10 January 2021

Kindly reconfirm the need for gift deed as I understand that in case of share transfer i.e. movable property, a gift deed is advisable to maintain a proper legal record; however it is not mandatory as in case of movable property.

Secondly, it is also requested to reconfirm whether parents need to fill income tax returns just because of receipt of gifted shares or only when their income from shares ( dividend/ Gains on sale) exceeds the basic exemption limit.